SOCOL CRISTIAN| MARINAS MARIUS MINIMUM WAGE AS A PUBLIC POLICY INSTRUMENT – PROS AND CONS Table 4. Ratio of the income of households with 2 minimum wages to the minimum subsistence and minimum decent living costs(2001-2015) 140 118.5 104.9 76.8 120 101.6 112.9 100 92.6 93.5 99.0 99.9 107.6 83.4 88.4 82.8 95.9 76.6 87.3 80 75.4 76.9 83.0 60 54.1 64.0 75.4 71.9 68.6 72.6 68.8 46.3 59.0 63.6 40 53.3 38.3 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Pondere 2 salarii minime/ Minimul decent de trai Pondere venit 2 salarii minime/ Minimul de subzistență Source: For 2001-2011, estimates by Mihăilescu(2012); for 2012-2015, own estimates based on extrapolation of the ICCV method The analysis of the minimum subsistence/ minimum decent living consumer basket relationship for the three categories of households with minimum-wage employees is another argument in favor of the feasibility of an increase in the minimum wage. For the most part of the analyzed period, the income of these households was insufficient to cover at least the minimum subsistence costs and in no case a minimum decent living standard. The development and implementation of social/income policies by which the minimum wage could cover the minimum decent living consumer basket are absolutely necessary. 10. Econometric estimation of the minimum wage impact In order to model the impact of the minimum wage, we considered the macroeconomic variables that act as mechanisms to adjust its effects – employment and labor, inflation, productivity – and a variable influenced by them, i.e. the average wage. The analysis aimed to estimate the nature and intensity of the connections between the variables and to answer to several relevant questions in the literature: does the minimum wage have a negative impact on total employment and on youth employment? Does inflation act as a minimum wage increase adjustment mechanism in Romania? How does the average wage respond to the shocks of the minimum wage? Does the minimum wage have a negative impact on the competitiveness of companies? The methodology used was based on the one proposed by Andreica et al.(2010). For this purpose, we used the following variables: gross minimum wage, gross average wage in the economy, total employment rate, total activity rate, youth employment rate(age 15-24), youth activity rate, work productivity index in the economy, consumer price index and industrial product price index. The data used have a quarterly frequency, from Q1 2001 to Q1 2016, and this period was chosen for reasons of availability of all the variables considered. The employment and activity rates were expressed as percentage of population in various age groups, the consumer price index and industrial product price index values in terms of percentage variations from quarter to quarter, the gross minimum wage and gross average wage in nominal terms(in the national currency) and the work productivity as the ratio of gross value added in the price of inputs to the total population employed in the economy. 31